Daily FX & Market Commentary - Debt ceiling fears resurface

Daily FX Commentary: (Morning Report)

EUR/USD 

The Euro remains steady, trading in consolidative sideways mode, off fresh 11-month high at 1.3400, posted yesterday. Close above 1.3360, yesterday’s opening price, keeps the upside in near-term focus, however, further consolidation cannot be ruled out, as 4h studies are extended. Range floor at 1.3335 so far holds the downside, with further easing towards strong support at 1.3300, reinforced by ascending 20 day EMA, seen not harmful for near-term bulls, while only slide below 1.3247 higher platform and Fib 38.2% of 1.2996/1.3401 would delay. On the upside, clear break above 1.3400 is required to resume near-term bulls off 1.3000 base and open way towards 1.3485/1.3500, next targets. 

Res: 1.3395, 1.3402, 1.3450, 1.3485 
Sup: 1.3335, 1.3300, 1.3280, 1.3247 

GBP/USD 

Cable remains under pressure despite recovery from yesterday’s low at 1.6030, as gains failed to regain important 1.6200 barrier, where 55 day EMA caps for now. Negative hourly studies and 4h indicators sliding below the midlines, keep the downside vulnerable, with immediate support at 1.6030, ahead of very strong support zone at 1.6000/1.5991, loss of which would trigger fresh leg lower and expose 1.5960 and 1.5900. Conversely, bounce above 1.6200, would avert immediate downside risk. 

Res: 1.6093, 1.6103, 1.6121, 1.6154 
Sup: 1.6063, 1.6030, 1.6006, 1.5991 

USD/JPY 

The pair extends near-term corrective pullback off fresh high at 89.66, posted yesterday, following failure on renewed attempt higher and subsequent fall through initial support at 89.00. Dips so far retraced nearly 38.2% of 86.81/89.66 ascend at 88.62, with prevailing negative tone on hourly chart and 4h indicators descending from overbought zone that suggest further corrective action. Penetration through previous high at 88.40 would risk an extension towards 88.00, Fib 61.8% and 4h 55 day EMA, loss of which would put near-term bulls on hold in favor of stronger reversal of rally from September 2012. 

Res: 89.08, 89.66, 90.00, 90.39 
Sup: 88.62, 88.40, 88.00, 87.90 

USD/CHF 

Yesterday’s extension of recovery rally from 0.9100 support zone, eases bear-pressure, as gains retraced 76.4% of 0.9302/0.9109 decline at 0.9260. Improved near-term studies now shift focus higher, however regain of 0.9272 and 0.9300, is required to confirm base at 0.9100/0.9080 zone and allow for stronger correction. Pullback on overbought hourlies should be ideally contained at/above 0.9200, to keep bulls intact. 

Res: 0.9260, 0.9272, 0.9300, 0.9345 
Sup: 0.9220, 0.9200, 0.9191, 0.9165 

====================================================================

Daily Market Commentary: (Evening Report)

London Market Report

London close: Markets cautious as US debt fears resurface

Market Movers

• techMARK 2,181.78 -0.42%
• FTSE 100 6,117.31 +0.15%
• FTSE 250 12,774.79 +0.12%

- Anglo sinks into the red by the close
- Burberry jumps after Q3 update
- Debt ceiling concerns resurface, Obama takes hard-line approach

The FTSE 100 finished with only slight gains on Tuesday afternoon as markets continued to be range-bound with concerns over the US debt ceiling weighing on the mood.

"Today saw investors pause for breath and a degree of selling took place halfway through the session only for the losses to be reversed and the FTSE 100 has ended up back in positive territory," according to Angus Campbell, the head of market analysis at Capital Spreads.

"This degree of indecision has still yet to force the hands of those sellers in putting more downward pressure on stocks to create a more convincing retracement, whilst at the same time there is little impetus to send the markets higher for the next leg upwards."

He said that investors "seem to be sitting on their hands waiting for the next big event", reflected in the FTSE 100 trading within a narrow range of around 40-50 points over the last few days.

Debt ceiling fears resurface

President Barack Obama said last night that he would not negotiate with Republicans over raising the debt ceiling, declining to trade cuts in government spending in exchange for increasing the borrowing limit.

"If the goal is to make sure that we are being responsible about our debt and our deficit - if that's the conversation we're having, I'm happy to have that conversation," Obama told a news conference. "What I will not do is to have that negotiation with a gun at the head of the American people."

The ceiling will be reached within the next month or two, according to Treasury Secretary Tim Geithner.

"While this is at least a month away, there's already a sense of anxiety in the markets due to the inability in the past of US lawmakers to come to an agreement until the 11th hour," said market analyst Craig Erlam from Alpari.

Mixed newsflow elsewhere ensured that stocks lacked direction today, as traders reacted to disappointing growth figures in Germany, a solid bond auction in Spain and hints about further stimulus measures in Japan by the central bank governor.

Meanwhile, the Centre for Economics and Business Research warned that Britain may be stripped of its AAA credit rating as national debt continues to soar through the roof.

Europe Market Report 

Europe midday: Unlikely Spain will ask for a bail-out this year, Fitch says

- Fitch: Unlikely Spain will ask for a rescue in 2013
- Slight falls in most benchmarks
- German GDP contracted towards end of year
- Spanish long-term bond yields reverse course and fall

FTSE 100: 0.03%
Dax-30: -0.49%
Cac-40: -0.21%
FTSE Mibtel 30: 0.05%
Ibex 35: -1.05%
Stoxx 600: -0.07%

The main European equity benchmarks were trading slightly lower by midday for the most part.

This following a warning by ratings agency Fitch that a delay in increasing the US federal debt limit could put the country's triple A rating at risk. As well, Fitch has indicated that it does not expect Spain to petition the European Stability Mechanism (ESM) for a rescue this year.

That last observation seems to have been what weighed on Spanish bonds in the early going, despite what looked to have been a fairly successful auction of €5.7bn of bills.

Of interest as well, Bank of England Governor Sir Mervyn King was cited as insisting that a banking union is not the solution to the Eurozone's problems.
All of the above came after slight losses last night on Wall Street and the reappearance of tensions on Capitol Hill over the federal government debt limit and the need for fiscal consolidation.

Of interest, however, yesterday evening ratings agency Standard&Poor's (S&P) raised its outlook on the sovereign debt ratings for Finland and Luxembourg.

Weaker than expected German GDP

Germany's gross domestic product (GDP) grew at an 0.7% year-on-year pace in 2012, below the 0.8% pace expected and the previous year's rate of 3%.

Economic activity contracted at a 0.5% pace in the last three months of 2012 the country's Statistics Office added.

Italian consumer prices increased at a 2.3% year-on-year clip in December, versus a rise of 2.4% in November.

The Eurozone trade surplus for the month of November rose to €11bn, after a reading of €7.4bn for the previous month (Consensus: €8bn).

The Netherlands' trade surplus rose to €4.3bn in November, after a reading of €3.6bn for the month before.

Single currency nudges higher

The euro/dollar is now falling by 0.45% to the 1.3318 dollar mark. Deutsche Bank expects the single currency to reach 1.40 in its cross versus the US unit this year.

Front month Brent crude futures are down slightly, by 0,116 dollars, to the 112.17 dollar mark on the ICE.

US Market Report

Stocks Seeing Modest Weakness After Early Downward Move

After moving to the downside in early trading, stocks have seen continued weakness over the course of morning trading on Tuesday. The major averages remain stuck in negative territory after ending the previous session mixed.

The weakness on Wall Street comes as worries about continued gridlock in Washington regarding the debt ceiling has overshadowed a Commerce Department report showing stronger than expected retail sales growth.

Selling pressure has remained somewhat subdued, however, as traders continue to wait for earnings season to pick up steam before making any significant moves.

Nonetheless, computer hardware stocks are seeing notable weakness, with the NYSE Arca Computer Hardware Index down by 1 percent. Logitech is posting a steep loss after being downgraded to underperform by Credit Suisse.

Semiconductor and bio stocks have also moved to the downside on the day, while some strength is visible among gold stocks.

The major averages have moved to the upside in recent trading but remain in the red. The Dow is down 19.52 points or 0.1 percent at 13,487.80, the Nasdaq is down 16.24 points or 0.5 percent at 3,101.26 and the S&P 500 is down 3.07 points or 0.2 percent at 1,467.61.

==================================================================== Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Daily Market Commentary - Market rally after US budget deal

Daily Market Commentary: (Evening Report)

London Market Report

FTSE 100 breaks 6,000 after US budget deal

    Market Movers
    techMARK 2,150.87 +1.97%
    FTSE 100 6,027.37 +2.20%
    FTSE 250 12,611.85 +1.91%

The FTSE 100 surged past the psychologically-important level of 6,000 on Wednesday as stock markets across the globe celebrated the last-minute deal by US politicians to avert the fiscal cliff.

While the budget saga Stateside is far from over - talks over spending cuts go on while concerns over the government’s debt ceiling have resurfaced - the House of Representatives passed a Senate-backed bill in the early hours of Tuesday morning to stop massive tax rises and spending cuts, by 257 votes to 167. A day before it had cleared the Senate by a majority of 89 votes to 8.

The fiscal cliff - scheduled tax rises of around $536bn and spending cuts of $109bn - was widely expected to throw the US economy back into recession if politicians couldn't break months of impasse.

Major benchmark indices across Europe finished today’s session up 2-3%, while markets on Wall Street opened around 2% higher. London’s blue-chip index gained 130 points, or 2.2%, to finish at 6,027. The last time the Footsie closed higher was at the end of April 2011. Nevertheless, the largest technical hurdle will come in towards the 6,100 point level, according to analysts at Digital Look.

"Immense New Year relief rally for global financial markets following the passage of a bill in the US to avert the full force of the fiscal cliff," said market strategist Ishaq Siddiqi from ETX Capital.

"2013 has kicked off with a bang with bulls in full control of price-action – the risk rally sees all your traditional investments in vogue (stocks EUROSTOXX making 16-month high, euro, commodities, peripheral bond yields, banks, miners et al) while core government bonds and US Treasuries take a beating."

Gains on stock markets were cemented in afternoon trade following a series of upbeat manufacturing figures. Manufacturing purchasing managers’ indices (PMIs) in the UK, Italy and US managed to beat expectations today, though the Eurozone PMI number missed forecasts slightly.

Europe Market Report 

Stocks at 19-month high after US budget deal

FTSE 100: 2.13%
Dax-30: 2.15%
Cac-40: 2.37%
FTSE Mibtel 30: 3.81%
Ibex 35: 3.12%
Stoxx 600: 1.97%

European equities rocketed to a 19-month high Wednesday after the US breathed a sigh of relief as they reached a budget deal.

Lawmakers passed a bill Tuesday that avoided most tax hikes and postponed spending cuts by raising taxes for higher earners.

The legislation brought an end to a year-long impasse over how to avert the so-called fiscal cliff.  President Barack Obama will sign off the bill after the House voted 257-167.

"Thanks to the votes of Democrats and Republicans in Congress I will sign a law that raises taxes on the wealthiest 2% of Americans while preventing a middle-class tax hike that could have sent the economy back into recession and obviously had a severe impact on families all across America," he said in a press conference.

However, the bill has left a number of problems unresolved with some strategists saying it was merely a short-term fix which did nothing to prevent future budget conflicts.

Swedish regulator cracks down on traders

The Swedish Financial Supervisory Authority will step up pressure on traders who break rules that require them to report company bond prices.

The watchdog will crack down on corporate debt traders to abide by existing rules in a bid to improve transparency in a growing market.

Traders will have to file trade reports including volumes and closing prices no later than 9:00 the following day.  The krona strengthened 0.23% at 6.4877 to the dollar at 16:30 Wednesday.

Euro falls against dollar
The euro dropped 0.07% to the 1.3195 dollar despite a positive start to the day.  Front month Brent crude futures increased 1.130 to 112.370 on the ICE.

US Market Report

Stocks Holding On To Strong Gains After Early Rally

After moving sharply higher at the start of trading, stocks have continued to perform well over the course of morning trading on Wednesday. The major averages have not seen much follow-through on their initial upward moves but remain firmly positive.

The rally on Wall Street comes as traders breathe a sigh of relief after both the House and the Senate approved legislation that allows the U.S. to avoid the fiscal cliff.

The agreement calls for the expiration of the Bush-era tax rates for individuals earning more than $400,000 and households earning more than $450,000. Payroll taxes and taxes on capital gains and dividends also go up under the agreement, which also extends unemployment benefits.

Meanwhile, the legislation delays the automatic spending cuts that were due to go into effect for two months, meaning that there are future budget negotiations ahead.

With the news eliminating some of the uncertainty about the outlook for the economy, steel stocks have moved substantially higher on the day. The NYSE Arca Steel Index is up by 3.5 percent after reaching its best intraday level in eight months.

Semiconductor stocks are also seeing considerable strength, with the Philadelphia SemiconductorIndex up by 3.1 percent. Earlier in the session, the index reached a three-month intraday high.

Most of the other major sectors have also shown strong moves to the upside, with housing, biotechnology, railroad, and telecom stocks posting standout gains.

The major averages have moved roughly sideways in recent trading, holding on to strong gains. The Dowis up 249.23 points or 1.9 percent at 13,353.37, the Nasdaq is up 71.70 points or 2.4 percent at 3,091.21 and the S&P 500 is up 27.00 points or 1.9 percent at 1.453.19.

==================================================================== Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Weekly Market analysis - currency policies remain in focus following FED decision on additional QE

Weekly Market analysis

Monetary and currency policies will remain a very important focus following the Federal Reserve decision to sanction additional quantitative easing during 2013 and further action by the Bank of Japan.  There will be further unease over the implications of currency gains and resistance is liable to increase which will risk fuelling a more aggressive phase of currency wars as central banks look to resist currency appreciation. Key events for the forthcoming week Date Time (GMT) Data release/event Thursday December 27th 15.00 US jobless claims Thursday December 27th 15.00 US consumer confidence Dollar: Fiscal policy will remain important in the short-term as fiscal talks continue and there is likely to be a deterioration in risk appetite which would support the dollar if there is no progress. The Federal Reserve stance will remain an important focus throughout the next few months and the dovish policies will have a negative impact on the US currency as the Fed continues its policies of bond purchases. There will still be expectations that the US economy will out-perform the Euro-zone which should provide some degree of dollar support. There has also been a retreat in precious metals prices which suggests that underlying dollar selling is likely to be contained. The dollar remained on the defensive for much of the week, but did find some respite as risk appetite faded again as the Euro retreated from the 1.33 area. Regional Fed Presidents Lacker and Fisher continued to voice opposition to the recent additional quantitative easing. There were, however, strong expectations that the dovish view would prevail, especially with the doves maintaining a strong position on the 2013 FOMC which will keep policy loose. The US current account deficit narrowed to US$107.5bn from a revised US$118.1bn the previous quarter. As a percentage of GDP the deficit was below 3.0% compared with a peak above 6% of GDP in 2005. There is the potential for a medium-term decline in the deficit as the energy deficit narrows and the US currency will be slightly less vulnerable to underlying selling. The US jobless claims data was slightly weaker than expected with an increase to 361,000 in the latest week from a revised 344,000 figure the previous week. The other releases were stronger than expected with the third-quarter GDP estimate revised up to 3.1% from 2.7%. In addition, there was a stronger than expected reading for existing home sales at 5.04mn from 4.76mn the previous month while the Philadelphia Fed index increased to 8.1 from -10.7 the previous month. US budget negotiations remained an important focus as the House of Representatives debated the so called ‘plan B’. Speaker Boehner insisted that the House had the votes to pass the bill while President Obama stated that it would be vetoed.  As the vote deadline approached, Boehner admitted that he did not have enough support and the vote was cancelled as some Republicans refused to back any tax increases. Further votes are not scheduled until at least December 27th which triggered a sharp deterioration in risk appetite on fears that the year-end deadline would be missed. Markets still expect that a compromise deal will be reached eventually which helped cushion the impact, but sentiment could deteriorate sharply if deadlock persists   Euro There will be further relief that the acute Euro-zone crisis phase has eased with the Greece debt buyback completed while there has been a further decline in peripheral bond yields.  There is a very heavy schedule of peripheral debt issuance during the first quarter of 2013 which will make it difficult for Spain to resist a bailout. The underlying growth outlook remains extremely weak which will maintain pressure for a more aggressive ECB policies. Political tensions will also intensify with Italian elections likely in February and the Euro will find it very difficult to make any sustained headway given the net economic risks.  The Euro advanced to 7-month highs against the dollar on an easing of Euro-zone fears and improved risk appetite and peaked at 1.33 before edging lower. ECB President Draghi was also cautiously optimistic surrounding the 2013 outlook as Euro-zone officials continued their attempts to play-up the economic prospects. Draghi expressed confidence that competitiveness in Spain was starting to improve and was optimistic over the benefits of a single bank supervisor. There was a further increase in bad debts within Spanish banking sector as the ratio rose to a fresh historic high of 11.2% in November from 10.7% previously which will maintain fears over the Spanish outlook.  For now, however, wider fears surrounding the Euro-zone have eased which has encouraged a further drop in speculative short positions against the currency and the Greek credit rating was revised to B- from selective default with a stable outlook. The German IFO index was slightly stronger than expected with a second successive monthly increase to 102.4 from 101.4. Although there was a lower than expected reading for current conditions, the data maintained a more favourable tone. There was a further decline in peripheral bond yields which helped underpin sentiment as Italian benchmark yields declined to a two-year low.  ECB member Asmussen stated that he would be very reluctant to cut the deposit rate to below zero which cast some doubt over the prospects for an ECB rate cut. Yen: The LDP won a huge victory in the recent lower-house elections and the strength of their majority should mean that they can over-ride any veto attempt from the Upper House. The government will push ahead with aggressive policies to combat deflation. There will also be intense pressure on the Bank of Japan to take an even more aggressive stance on monetary policy and the bank will consider an increased inflation target early in 2013.  These pressures will exert downward pressure on the yen, but the currency could still gain at times when there is a deterioration in global risk appetite. The Japanese election result recorded a major LDP victory as they won 294 of the 400 seats in the lower house with their partner winning a further 30. The results give the coalition a two-thirds majority and this is extremely important as the government can over-rule opposition from the Upper House The latest trade data recorded a headline deficit of JPY953bn from a revised JPY549bn previously as exports recorded a 4.1% annual decline. The data reinforced fears surrounding the export outlook and reinforced negative yen sentiment. The Bank of Japan announced a further JPY10trn in quantitative easing which was in line with market expectations. There is still a high degree of pressure on the central bank to take additional steps to boost the economy and sanction additional policy measures. Incoming Prime Minister Abe stated that the central bank was carrying out policy steps sought by the government one at a time in a clear reference to the government expecting further action. The administration is planning an emergency economic package in January and the yen remained under heavy selling pressure. The yen found support towards the 84.50 area against the dollar and recovered ground as risk appetite deteriorated sharply following the collapse in US fiscal cliff talks. The US currency moved back to the 84 area as the Euro retreated to below 111. Sterling There will be further unease surrounding the UK economic outlook with expectations of a weak fourth-quarter.  There will be major uncertainties surrounding Bank of England policies and there will certainly be pressure for the central bank to maintain an aggressive stimulus policy to underpin demand.  There will be speculation over a shift towards nominal GDP targeting when Carney takes over as Governor later next year.  The UK currency will continue to gain some protection from the aggressive policies pursued by other global central banks, but Sterling is unlikely to make significant headway. Sterling was resilient during the week and challenged 3-month highs around 1.63 against the dollar before consolidating slightly lower. There were further concerns surrounding the AAA credit-rating following the Standard & Poor’s decision to downgrade the outlook to negative and there was further speculation that the rating would be lost during 2013.  With the Federal Reserve increasing its bond purchases and the Bank of Japan expand policy further this week, there will be some initial Sterling support on relative grounds with expectations that the Bank of England will hold policy steady in the short-term.. The latest inflation data recorded an unchanged annual rate of 2.7% for November compared with expectations of a marginal decline. Although the RPI rate dipped to 3.0% from 3.2%, there were some expectations that the stickiness in inflation would curb any further quantitative easing by the Bank of England. The Bank of England minutes were broadly in line with expectations as the MPC voted 9-0 for unchanged interest rates while there was a 8-1 vote in favour of leaving quantitative easing on hold as Miles again voted for a further £25bn expansion in bond purchases. The bank was generally pessimistic over the growth outlook and warned over the stickiness of inflation. There were also further calls for a weaker exchange rate with Sterling’s gains described as unhelpful and a headwind for recovery and this is likely to be an important issue during 2013. The headline retail sales report was weaker than expected with sales unchanged for November following a revised 0.7% decline for October. There was also a sharp decline in the latest GfK consumer confidence reading from -22 to -29. Swiss franc: The National Bank will remain strongly committed to maintaining the 1.20 minimum Euro level in the short-term, especially with a strong determination to resist franc appreciation to protect competitiveness. Aggressive policy relaxation elsewhere will maintain the risk that upward pressure on the franc will intensify again as investors look for a safe-haven, especially if the Japanese yen is subjected to further selling pressure. The dollar remained firmly on the defensive against the franc and dipped to fresh 7-month lows just below 0.91 before staging a weak corrective recovery. The Euro consolidated around the 1.2080 area with narrow ranges prevailing. With liquidity declining into the Christmas period there is likely to be an increased reluctance to take on the National Bank and the 1.20 minimum level and a potential for a further round of short Euro covering. There were wider concerns surrounding the risk of renewed tensions during 2013 and the franc also gained support from a lack of attractive safe-havens, especially with the yen under serious selling pressure. Australian dollar The Australian dollar continued to probe resistance above 1.05 against the dollar during the week, but it was unable to sustain the gains and retreated back to below the 1.05 level. The currency was unsettled to some extent by a decline in gold prices and dipped again when there was a deterioration in risk appetite. The monetary policy minutes suggested that the bank could be cautious over further interest rate cuts, but Reserve Bank Governor Stevens also continued to suggest that the currency was over-valued and that it should be weaker. There is likely to be resistance to currency gains with the Reserve Bank under pressure to push the currency weaker, especially if growth fears intensify. Canadian dollar: The Canadian dollar was unable to make further headway during the week and edged back to the 0.99 area as narrow ranges generally prevailed. The latest retail sales data was stronger than expected which provided some relief and oil prices were generally firm, but a decline in gold prices had some negative impact. Even with near-term resilience and optimism surrounding the fundamentals, the Canadian dollar will find it difficult to advance from current levels.

Daily FX & Market Commentary - Traders Keep Close Eye On Washington

Daily FX Commentary: (Morning Report)

EUR/USD

The single currency is taking a pause in recent strong rally, as psychological 1.3300 level proves to be tough barrier. Subsequent quick pullback and slide below 1.3200 handle, sidelines near-term bulls, as hourly indicators moved in the negative territory and notion being supported by Gravestone Doji that signals loss of upward momentum and stronger reversal. With initial strong support at 1.3200/1.3186 being dented, where 20 day EMA contained dips for now. However, further reversal cannot be ruled out, with next support at 1.3140 zone, Fib 38.2% of 1.2876/1.3307 and 17 Dec low, required to hold and prevent the pair form deeper slide. On the upside, lift above 1.3250 would signal higher low and shift focus towards 1.3300 barrier. Strong bullish stance on a daily chart, still keeps the upside favored, with 1.3360, weekly 90 day MA and 1.3380, April highs, seen as near-term targets.

Res: 1.3227, 1.3253, 1.3307, 1.3360
Sup: 1.3200, 1.3186, 1.3142, 1.3100 

GBP/USD

Near-term bulls are losing traction, after Cable briefly tested very strong 1.6300 barrier but failure to sustain gains, resulted reversal to initial support zone at 1.6240, where 55 day EMA so far contained losses. Negative structure on hourly chart, with price holding below descending 20 day EMA and 4h indicators reversing from overbought zone, see potential for further retracement, with 1.6200, round figure / near 38.2% of 1.6000/1.6305, seen as next downside target, with break here to confirm near-term top and open way towards 1.6100.

Res: 1.6260, 1.6268, 1.6300, 1.6308
Sup: 1.6236, 1.6200, 1.6190, 1.6175


USD/JPY

The pair dips below psychological 84.00 support, as gains stalled at 84.61 and reversal retraced nearly 61.8% of 83.30/84.61 upleg at 83.84. near-term structure is now negatively aligned, with immediate risk seen towards 83.60/30 support. Losing the latter will also fill last Monday’s gap and risk stronger correction of the recent rally. Reversing 4h and overbought daily studies are supporting such scenario, with close below 84.00, required to confirm. Conversely, regain of previous top at 84.32, would avert immediate downside risk.

Res: 84.00, 84.32, 84.46, 84.61
Sup: 83.80, 83.60, 83.30, 83.00 


USD/CHF

The pair enters corrective phase after fresh losses through psychological 0.9100 support, found temporary ground at 0.9085, 20 day lower Bollinger Band. Subsequent bounce so far tested initial barrier and previous low at 0.9150, where 20 day EMA limited recovery for now. Improved conditions on hourly chart, see potential for possible further extension higher and test of psychological 0.9200 barrier, break of which is required to confirm recovery. From the other side, firmly bearish daily structure, sees the current move as corrective and preceding fresh weakness that would focus 0.9040/00, next downside targets.

Res: 0.9153, 0.9200, 0.9240, 0.9268
Sup: 0.9126, 0.9100, 0.9085, 0.9040

====================================================================


Daily Market Commentary: (Evening Report)

London Market Report

Stocks finish flat on US budget uncertainty

    Market Movers
    techMARK 2,131.98 +0.12%
    FTSE 100 5,958.34 -0.05%
    FTSE 250 12,422.77 +0.16%

The FTSE 100 index finished broadly flat on Thursday afternoon, taking a pause of two days of decent gains, with the focus remaining on the US 'fiscal cliff' ahead of the Christmas holiday.

Even a positive surprise in US gross domestic product (GDP) failed to give markets a boost. The American economy expanded at an adjusted annual rate of 3.1% in the third quarter, well ahead of the previously estimated 2.7% growth forecast.

"European markets have struggled to retest yesterday’s highs despite gaining momentum in the first few hours of trading," said sales trader Toby Morris from CMC Markets.

"Investors saw the early recovery from yesterday’s late sell off halted with traders unable to find any real distractions to the politics in the US to push markets to new levels," he said.

Stocks finished slightly higher on Wednesday after Standard & Poor's upgraded Greece's credit rating to 'B-minus' and the IFO German business climate index beat expectations. However, gains were pared by the close after the White House Communications Director Dan Pfeiffer said that President Barack Obama would veto any ‘plan B’ for the 'fiscal cliff' from House Speaker John Boehner.

Europe Market Report 

European Markets Finished Mixed On Fiscal Cliff Concerns

The European markets ended Thursday's trading session with mixed results. The stalemate in the U.S. fiscal cliff negotiations has investors concerned, as the end of the year draws ever closer. The strong upward revision in U.S. GDP for the third quarter initially sparked gains in Europe, which then quickly eroded.

The White House Wednesday threatened to veto a plan put forward by leading House Republicans aimed at delaying the onset of the 'fiscal cliff.' The plan, called 'Plan B,' was presented by House Speaker John Boehner.

According to a White House, Boehner's proposal would only raise roughly a third of the $1 trillion in tax increases from high-income households that had previously been proposed by the Speaker.

The White House Communications Director Dan Pfeiffer said President Barack Obama is still seeking "a significant, balanced deal that is good for American families, the economy and for our nation's future" and has put forward a proposal that offers to meet Boehner halfway on taxes and spending.

The European Commission on Thursday approved restructuring plans of four Spanish banks, allowing those banks to receive aid from the Eurozone bailout fund. The commission concluded that the restructuring plans of four Spanish banks, namely Liberbank, Caja3, Banco Mare Nostrum (BMN) and Banco CEISS, are in line with EU state aid rules.

The Italian Senate has approved Prime Minister Mario Monti's budget bill for 2013. Monti had previously announced that he will resign as Prime Minister once the budget receives final approval. His resignation will lead to a general election.

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.21 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, declined by 0.05 percent.

The DAX of Germany climbed by 0.05 percent and the CAC 40 of France gained 0.50 percent. The FTSE 100 of the U.K. fell by 0.05 percent and the SMI of Switzerland decreased by 0.48 percent.

US Market Report

Stocks Nearly Flat As Traders Keep Close Eye On Washington

Stocks continue to turn in a lackluster performance in mid-day trading on Thursday amid renewed uncertainty about the looming fiscal cliff. The focus on developments in Washington has overshadowed a batch of largely upbeat economic data.

Currently, the major averages are nearly flat on the day. While the S&P 500 has edged up 1.62 points or 0.1 percent to 1,437.43, the Dow is down 1.80 points or less than a tenth of a percent at 13,250.17 and the Nasdaq is down 1.64 points or 0.1 percent at 3,042.72.

The choppy trading on Wall Street comes as traders continue to keep a close eye on Washington, as uncertainty about the fiscal cliff has crept back into the markets following recent comments by President Barack Obama and House Speaker John Boehner.

Boehner has indicated that he will bring his "Plan B" legislation to the floor of the House for a vote despite a veto threat from the White House.

The "Plan B" legislation would extend the Bush-era tax cuts for people making up to $1 million, but Democrats claim it would raise taxes on millions of working families.

Boehner has argued that the president would be responsible for the largest tax increase in American history if he can't persuade Senate Democrats to approve the legislation.

As a result of the focus on the budget negotiations, traders have largely shrugged off the latest batch of U.S. economic data, including reports showing stronger than expected existing home sales growth and a rebound in Philadelphia-area manufacturing activity.

The National Association of Realtors said existing home sales rose 5.9 percent to an annual rate of 5.04 million in November from a downwardly revised 4.76 million in October. Economists had expected existing home sales to climb to 4.90 million.

With the bigger than expected increase, existing home sales rose to their highest level since spiking to 5.44 million in November of 2009.

Separately, the Philadelphia Federal Reserve said its diffusion index of current activity climbed to a positive 8.1 in December from a negative 10.7 in November, with a positive reading indicating an increase in regional manufacturing activity. Economists had expected the index to remain negative.

The Commerce Department also released a report showing a bigger than expected upward revision to the pace of GDP growth in the third quarter, while the Labor Department reported a modest rebound in weekly jobless claims.

Other Markets


In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. While Japan's Nikkei 225 fell by 1.2 percent following recent strength, Hong Kong's Hang Seng Index inched up by 0.2 percent.

In the bond market, treasuries are pulling back near the unchanged line after moving higher earlier in the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 1.793 percent after hitting a low of 1.77 percent.

==================================================================== Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Daily FX & Market Commentary - Worries over the ‘fiscal cliff’ resurfacing

Daily FX Commentary: (Morning Report)

EUR/USD

The Euro continues to trend higher, extending the latest upleg from 1.2876, 07 Dec low. Break and close above psychological 1.3200 barrier, confirms the fresh bull-phase, following three-month congestion under 1.3170 peak. Larger picture bulls see room for fresh extension higher and test of initial targets at 1.3282, 01 May high and 1.3300, round-figure resistance, with strong resistance zone at 1.3500, yearly high / Fib 50% of 1.4938/1.2042, expected to come in near-term focus. Consolidative / corrective action on extremely overbought hourly studies, may precede fresh bulls, with initial static supports standing at 1.3220/00, reinforced by 20 day EMA and previous high at 1.3186. Any stronger reversal should be contained by 1.3100 zone, Fib 38.2% of 1.2876/1.3253 / 55 day EMA.

Res: 1.3253, 1.3282, 1.3300, 1.3350
Sup: 1.3220, 1.3200, 1.3186, 1.3142


GBP/USD

Near-term bulls remain fully in play for possible test of key barrier and multi-month range top at 1.6300, as yesterday’s strong rally reached 1.6286 high, just ahead of 1.6300/08, 30 Apr / 21 Sep yearly peaks. Overextended near-term studies suggest a pause in rally, however, no clear reversal signal seen yet. Overnight’s corrective low at 1.6244 offers immediate support, ahead of more significant higher platform and Fib 38.2% of 1.6084/1.6286 upleg at 1.6200 that is expected to contain any stronger pullback.

Res: 1.6286, 1.6300, 1.6308, 1.6388
Sup: 1.6244, 1.6200, 1.6190, 1.6175 


USD/JPY

The pair resumes near-term rally that was interrupted by two-day 84.32/83.60 corrective action. With fresh high posted just under our initial target at 84.50, scope is seen for possible stretch towards psychological barrier at 85.00, also weekly 200 day MA. However, overbought conditions on lower and larger timeframes, require caution, as failure to surpass 84.50, would result in stronger corrective action towards 83.80/60 support zone.

Res: 84.42, 84.50, 85.00, 85.51
Sup: 84.21, 84.00, 83.80, 83.60


USD/CHF

Bears remain unobstructed, as the pair continues to post fresh lows, following loss of important 0.9200 level. As the price approaches psychological 0.9100 support, bearish extension through here would eye 0.9041 and 0.9000, 01 May / 03 Apr lows. Near-term indicators in the oversold territory do not rule out bounce, with previous low at 0.9151, offering initial resistance, ahead of more significant 0.9200, round figure / near Fib 38.2% of 0.9381/0.9112 descend, break of which would provide temporary relief.

Res: 0.9136, 0.9151, 0.9192, 0.9215
Sup: 0.9112, 0.9100, 0.9080, 0.9041 

====================================================================


Daily Market Commentary: (Evening Report)

London Market Report

Gains pared after White House comments on 'fiscal cliff'

    Market Movers
    techMARK 2,129.53 +0.41%
    FTSE 100 5,961.59 +0.43%
    FTSE 250 12,402.41 +0.89%

The UK stock market staged a slight ‘Santa rally’ on Wednesday, with risk appetite increasing before Christmas on the back of a Greek ratings upgrade and a better-than-expected reading of German confidence.

“Santa has returned to the markets, bringing some much needed cheer before the Christmas break – traders are feeling risky as such,” said market strategist Ishaq Siddiqi from ETX Capital.

However, gains across Europe were pared by the close after US stocks opened mixed on Wall Street with worries over the ‘fiscal cliff’ resurfacing. The White House Communications Director Dan Pfeiffer said that President Barack Obama would veto any ‘plan B’ from House Speaker John Boehner.

“This is a concern to anyone relying on a deal being done by the end of the year,” said market analyst Craig Erlam from Alpari.

“The fact that Republicans are preparing a plan B suggests they are not willing to meet Obama in the middle on spending and tax issues. Obama’s rejection of the plan therefore suggests going over the fiscal cliff is yet again a possibility. These negotiations are starting to become a bit of a rollercoaster ride and I’m sure there’s going to be many more ups and downs between now and the end of the year.”

Nevertheless, providing a lift to the markets early on was last night’s news that Standard & Poor’s had upgraded its rating for Greece from 'selective default' to 'B-minus' to reflect “our view of the strong determination of Eurozone member states to preserve Greek membership”, the ratings agency said. The yield on a 10-year Greek bond dropped to its lowest level since March 2011 this morning.

Meanwhile, the IFO institute reported that the German business climate index improved to 102.4 in December, above the 101.4 reading the month before and ahead of the 102.0 forecasts. Meanwhile, while the current assessment survey missed estimates, the expectations survey provided a beat.

In other news, the Bank of England's Monetary Policy Committee (MPC) voted eight-to-one in favour to keep its asset purchase programme at £375bn in this month's meeting. The MPC voted unanimously to keep the Bank Rate at 0.5%.

Europe Market Report 

European Markets Climbed After Greek Upgrade

The European markets ended Wednesday's trading session in the green, following an upgrade of Greece's credit rating by S&P. Investor sentiment also received a boost from the stronger than expected German Ifo business confidence result. Shares of banks turned in a solid performance, after Credit Suisse upgraded its rating on the European banking sector.

The continuing fiscal cliff negotiations between Democrats and Republicans has made investors optimistic that a deal can be reached before the end of the year. The White House threatened to veto the 'Plan B' presented by House Speaker John Boehner. Senate Majority Leader Harry Reid had already said that Boehner's plan could not pass the Senate. Plan B would extend tax cuts for people making up to $1 million.

Standard and Poor's on Tuesday upgraded Greece's credit rating from 'selective default' (SD), citing the successful completion of the country's debt buyback program and the subsequent decision by European leaders to disburse loan installment.

Greece's long and short-term foreign as well as local currency sovereign credit ratings were lifted to 'B-' from 'SD'. Further, the ratings on all the outstanding issues, including those guaranteed by Greece, were upgraded to 'B-/B'. The outlook is 'stable'.

Bank of England policymakers voted 8-1 to leave the stimulus programme unchanged at GBP 375 billion as seen in November, the minutes of the latest monetary policy meeting showed Wednesday.

David Miles was the only member to call for more quantitative easing. According to minutes, the Monetary Policy Committee members said the current size of the asset purchase programme seemed appropriate for the present.

Further, the nine-member MPC unanimously decided to hold the key interest rate at a record low 0.50 percent. The meeting was held on December 5 and 6.

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.41 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.23 percent.

The DAX of Germany climbed by 0.25 percent and the CAC 40 of France gained 0.44 percent. The FTSE 100 of the U.K. rose by 0.43 percent and the SMI of Switzerland advanced by 0.71 percent.

Eurozone's current account surplus increased in October, but was lower than expected by economists, a report from the European Central Bank showed Wednesday. The seasonally adjusted current account surplus rose to EUR 3.9 billion in October from EUR 2.4 billion in September. Economists expected the surplus to rise to EUR 6.5 billion.

Euro area construction output in October declined at a faster annual rate again, data released by Eurostat, the statistical office of the European Union, revealed on Wednesday.

Construction output fell further by a seasonally adjusted 4.1 percent year-on-year in October, after recording a decline of 3.8 percent in September, which was revised from 2.6 percent reported earlier. In August, output decreased 1.5 percent.

German business confidence improved for the second straight month in December as expectations for next six months counteracted the deterioration in current assessment, survey results from the Ifo Institute showed Friday.

Surpassing economists' expectations, the headline business climate index rose to a five-month high of 102.4 from 101.4 in November. The reading was forecast to climb to 102.

Germany's leading economic indicator remained unchanged in October, ending the downward trend started in March, data from a survey by the Conference Board showed Wednesday. The leading economic index remained unchanged at 101.6 in October after dropping 0.6 percent in the previous month..

US Market Report

Stocks Continue To Show A Lack Of Direction

With traders taking a breather following the recent rally, stocks continue to show a lack of direction in mid-day trading on Wednesday. The major averages have spent the session bouncing back and forth across the unchanged line.

Currently, the major averages continue to turn in a mixed performance, with the tech-heavy Nasdaq posting a modest gain. While the Nasdaq is up 2.05 points or 0.1 percent at 3,056.58, the Dow is down 11.40 points or 0.1 percent at 13,339.56 and the S&P 500 is down 2.20 points or 0.2 percent at 1,444.59.

The choppy trading on Wall Street comes as traders seem reluctant to make any significant moves after the gains seen over the two previous sessions lifted the major averages to their best closing levels in about two months.

Traders are keeping a close eye on developments in Washington, as President Barack Obama and House Speaker John Boehner continue to work toward an agreement to avoid the looming fiscal cliff.

While signs of progress toward a compromise helped to drive stocks higher earlier in the week, traders may be waiting for more concrete signs of an agreement.

Earlier in the day, a statement from White House Communications Director Dan Pfeiffer indicated that Obama would veto Boehner's proposed "Plan B" legislation, which would extend tax cuts for people making up to $1 million.

Boehner unveiled the "Plan B" proposal on Tuesday as an alternative if lawmakers are unable to reach a broader budget agreement.

Pfeiffer claimed the legislation continues large tax cuts for the very wealthiest individuals while eliminating tax cuts that 25 million students and families struggling to make ends meet depend on and ending critical incentives for the nation's businesses.

On the economic front, the Commerce Department released a report before the start of trading showing that U.S. housing starts came in below economist estimates in November.

The report said housing starts fell 3.0 percent to an annual rate of 861,000 in November from the revised October estimate of 888,000. Economists had expected housing starts to fall to 865,000 from the 894,000 originally reported for the previous month.

At the same time, the Commerce Department said building permits rose 3.6 percent to an annual rate of 899,000 in November from the revised October rate of 868,000.


Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index surged up by 2.4 percent, while Hong Kong's Hang Seng Index rose by 0.6 percent.

In the bond market, treasuries are regaining ground following recent weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.8 basis points at 1.789 percent after ending the previous session at its highest closing level in well over a month

==================================================================== Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Daily FX & Market Commentary - 'fiscal cliff' optimism

Daily FX Commentary: (Morning Report)

EUR/USD

The Euro moves in a sideways consolidative mode, holding within 30-pips range, following yesterday’s failure on approach to 1.3200 barrier and Doji candle. As the latter proves to be tough barrier and the pair lacks momentum for push higher, stronger correction cannot be ruled out. The notion is supported by descending hourly and 4h studies emerging from overbought territory. Range lows at 1.3140 zone, reinforced by hourly Ichimoku cloud, offer initial support, ahead of more significant 1.3100, 13 Dec previous highs, loss of which to possibly expose psychological / Fibonacci 61.8% support at 1.3000.

Res: 1.3178, 1.3186, 1.3200, 1.3250
Sup: 1.3142, 1.3115, 1.3100, 1.3065


GBP/USD

The pair holds steady around 1.6200 handle, following yesterday’s break and close above the latter. Overall bulls remain intact for fresh extension higher that would focus key 1.6300 resistance zone. However, corrective easing may precede rally, as hourly indicators are reversing. Initial support lies at 1.6180/70 zone, previous tops and Fib 38.2% of 1.6084/1.6218 ascend, ahead of 1.6150, 50% retracement, where dips should be contained, otherwise, further delay and downside extension towards 1.6100/1.6085, would be likely.

Res: 1.6218, 1.6250, 1.6271, 1.6300
Sup: 1.6190, 1.6175, 1.6150, 1.6135 


USD/JPY

Near-term bears are running out of steam, after yesterday’s surge to fresh 1/ ½ year high, as the price slides below psychological 84.00 support, following repeated attempt at 84.32, yesterday’s high. With 4h studies starting to point lower, initial signal for corrective action is given, however, confirmation requires filling yesterday’s gap that will be seen on a dip to 83.50 and possible test of strong support at 83.30/20 zone, 13/14 Dec lows , Fib 61.8% of 82.09/84.32 ascend. Conversely, lift above 84.32, to open 84.50 and 85.00, weekly 200 day MA.

Res: 84.07, 84.15, 84.32, 84.50
Sup: 83.82, 83.50, 83.30, 83.20


USD/CHF

The pair consolidates recent losses, moving within narrow range above yesterday’s fresh low at 0.9151, with upside being capped under initial 0.9200 barrier for now. Overall bearish tone keeps the downside favored, with corrective bounce signaled by oversold 4h conditions. However, upside action requires clearance of strong 0.9200/40 resistance zone, previous lows and 20/55 day EMA’s, to avert immediate downside risk and allow for stronger retracement. Otherwise, risk of lower top under 0.9240 and fresh leg lower, would be the likely near-term scenario.

Res: 0.9192, 0.9210, 0.9213, 0.9240
Sup: 0.9165, 0.9151, 0.9100, 0.9080 

====================================================================


Daily Market Commentary: (Evening Report)

London Market Report


London close: FTSE 100 finishes strongly on 'fiscal cliff' optimism
Market Movers

• techMARK 2,120.84 +0.62%
• FTSE 100 5,935.90 +0.40%
• FTSE 250 12,293.25 +0.61%

- US budget negotiations lift hopes
- G4S up on renewed confidence
- FTSE 250 at all-time high

UK markets finished with strong gains on Tuesday afternoon as 'fiscal cliff' hopes spurred investors' appetites for riskier assets, such as mining stocks.

The second-tier FTSE 250 index was trading at a record high today, while Frankfurt's DAX was close to its best levels since 2008. However, as financial sales trader Toby Morris from CMC Markets pointed out this afternoon, "the FTSE 100 has once again underperformed finding progress above its recent highs somewhat problematic".

Eyes were kept firmly on budget negotiations Stateside today after President Barack Obama last night proposed raising taxes for those that earn over $400,000, a higher threshold than the $250,000 annual salary he had previously targeted.

Meanwhile, House Speaker John Boehner said that he is working on a "plan B" to "protect as many American taxpayers as we can". Under his new plan, tax increases will only be imposed on those earning over $1m a year.

"Markets feel that after days of slow progress, we are finally seeing a step-up in the pace of budget negotiations," said market strategist Ishaq Siddiqi from ETX Capital.

"Much work remains for US lawmakers however, who will have to endorse proposals but the last two days provides the market with a degree of confidence that we are seeing some constructive dialogue in Washington."

Economic news elsewhere was thin on the ground today, with Spanish and Greek bond auctions going smoothly and UK consumer price inflation staying unchanged at 2.7% in November. 

Europe Market Report 


Europe midday: Stocks steady ahead of US data
-Stock rose as US fiscal cliff fears diminished
-Core country bond yields increased slightly as haven demand receded
-Spanish banks´ bad loan ratio rose to 11.23 per cent for October
-Riksbank lowered benchmark policy rate
-Greek and Spanish bill auctions went off without a hitch

FTSE-100: 0.39%
Dax-30: 0.40%
Cac-40: -0.05%
FTSE Mibtel 30: 0.34%
Ibex 35: 0.82%
Stoxx 600: 0.3o%

The largest European equity benchmarks were still registering small gains by the midday mark following news overnight of concessions by US President Barack Obama on the fiscal front.

Worth noting – perhaps – there was some market chatter regarding pressure on core European bond yields, while on the periphery long-term interest rates were down a tad. The former seemed to be a result of diminished haven bids.

Acting as a backdrop, Sweden´s central bank opted on Tuesday to lower its benchmark policy rate by 25 basis points, to 1%, as expected.

Not to be missed, Spanish banks´ bad loan ratio rose to 11.23% in October, after a reading of 10.71% for the previous month.

Both the Greek and Spanish bill auctions went off without a hitch.

News that Chinese officials had again set a 7.5% target for their economy´s rate of expansion (in 2013), at their annual central economic work conference, buoyed mining and basic resource stocks.

Ireland´s economy grew more or less as was expected

Irish third quarter gross domestic product (GDP) expanded at a 0.2% quarter-on-quarter pace (Consensus: 0.7%). That disparity, however, was made up by an upwards revision to the prior month´s reading.

Italy´s current account deficit improved to €245m in October after a reading of €2.6bn for the previous month.

Moderate rise in crude futures

The euro/dollar was edging higher by 0.20% to the 1.3186 dollar mark.

Front month Brent crude futures were rising by 0.536 dollars, to the 108.26 dollar per barrel mark on the ICE.

US Market Report

US open: Homebuilder confidence back at levels from 2006
-Home builder confidence at 2006 levels
-Several M and A transactions in the news
-Single currency moving higher

Dow Jones Industrials: 0.42%
Nasdaq Comp.: 0.84%
S&P 500: 0.60%

The main US equity benchmarks are now registering moderate gains. That following yesterday´s late surge higher and as investors wait for Republicans´ reaction to Obama´s concessions yesterday. 

 

Home builder confidence back at April 2006 levels

The NAHB home builders´ confidence index for the month of December increased to 47 points after a reading of 45 points in the month before (down from a preliminary reading of 46).

The US third quarter current account deficit decreased to 107.5bn dollars, after a reading of 118.1bn dollars for the previous quarter (Consensus: 103bn dollars).

Same store weekly retail chain sales grew by 4.3% according to the latest ICSC survey data.

Month to date same-store retail sales have fallen by 0.2% according to Redbook.

Moderate rise in crude futures

Front month West Texas crude futures rose by 0.60% to the 87.70 dollar per barrel on the NYMEX.

10 year US Treasury yields are now rising by 2 basis points, at 1.78%.

==================================================================== Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Daily FX & Market Commentary: Fiscal cliff resolution may be postponed

Daily FX Commentary: (Morning Report)

EUR/USD

The Euro remains well supported, with last Friday’s surge through key barriers at 1.3138/70, resulted in testing levels just under psychological 1.3200 level and 30d Bollinger Band during the Asian session. Corrective easing is seen likely, as hourly indicators are emerging out of overbought zone, while 4h ones started o reverse. However, overall bullish tone remains intact, as clear break above 1.3200 would signal fresh bull phase after three-month congestion under 1.3170/38 peaks. On the upside, immediate target lies at 1.3282, 01 May high and psychological 1.3300 barrier. With dips being contained by 20 day EMA at 1.3140 for now, next strong supports lies at 1.3100 zone, also 55 day EMA and 1.3070, last Friday low / Fib 38.2% of 1.2876/1.3186 ascend.

Res: 1.3170, 1.3186, 1.3200, 1.3250
Sup: 1.3142, 1.3118, 1.3100, 1.3065 

GBP/USD

Cable is poised to break above psychological 1.6200 barrier, also Fib 76.4% of 1.6308/1.5826, the last barrier en-route to strong 1.6300 resistance zone. Near-term studies are positively aligned and keep the upside favored, with psychological support at 1.6100, also 50% of 1.6000/1.6200, expected to contain any stronger reversal.

Res: 1.6200, 1.6216, 1.6250, 1.6271
Sup: 1.6175, 1.6155, 1.6130, 1.6100


USD/JPY

Strong bullish stance has been confirmed by overnight’s gap-higher opening, as the price broke above previous annual high at 84.17. Corrective action off overnight’s fresh high at 84.32, holds for now above last week’s closing price, with any stronger retracement, as 4h studies are overbought and divergence appears on hourly chart, would face good supports at 83.30 and 83.00, levels expected to contain. On the upside, psychological 85.00 barrier comes in the near-term focus.

Res: 84.00, 84.15, 84.32, 84.50
Sup: 83.84, 83.50, 83.30, 83.00 


USD/CHF

Near-term bears remain fully in play, as the pair dips to 0.9150, following loss of 0.9200 base. Brief corrective action on oversold near-term conditions strong barriers at 0.9200/40 area that are expected to cap, with 0.9100 zone seen in the near-term focus, as the pair resumes broader downtrend from 0.9970, 24 July annual high.

Res: 0.9192, 0.9200, 0.9213, 0.9240
Sup: 0.9175, 1.9164, 0.9151, 0.9100

====================================================================


Daily Market Commentary: (Evening Report)

London Market Report

London close: Stocks falls as 'fiscal cliff' deadline looms
Market Movers

• techMARK 2,107.82 -0.40%
• FTSE 100 5,912.15 -0.16%
• FTSE 250 12,218.58 -0.21%

Increasing optimism surrounding budget talks between US politicians may have helped the FTSE 100 come off its intraday low, but the index was stuck firmly in negative territory with markets remaining nervous ahead of the January 1st deadline.

Without a deal, the $600bn in automatic spending cuts and tax increases which come into effect are expected to pull the US economy back into recession.

House Speaker John Boehner, under increasing pressure to soften his opposition to raising taxes for the wealthy, made an offer over the weekend that proposed increasing taxes on those who earn over $1m. While the Obama administration declined the proposal – it wants higher taxes for those who take in more than $250,000 a year – the White House described the offer as "progress".

"It's like a game of chicken between President Barack Obama and House Speaker John Boehner. Both know they must soften their stance at some point if they are going to come to an agreement, but neither wants to do it first," said market analyst Craig Erlam from Alpari.

"Boehner has now tempted Obama in claiming he may be willing to allow tax breaks expire for millionaires in exchange for cuts to entitlements, however Obama is unlikely to go for it, instead sticking to his original demands of tax hikes on the top 2%. What it may do though is encourage Obama to offer something in return which is desperately needed if these talks are going to progress given that there's only two weeks until the deadline." 

Europe Market Report 

Europe midday: Italy and Spain hold steady

- Peugeot leads gains on the Stoxx 600
- Shares of KPN crater
- Banks deposited 225.06bn euros overnight at ECB

FTSE-100: -0.49%
Dax-30: -0.03%
Cac-40: -0.36%
FTSE Mibtel 30: 0.13%
Ibex 35: 0.07%
Stoxx 600: -0.25%

The main European equity benchmarks were registering slight falls by the midday mark, despite news that the Liberal Democratic Party (LDP) had won in this past weekend´s elections in Japan. The LDP has been a fierce critic of the Bank of Japan, pressuring it to carry out a more aggressive monetary policy.

Market commentary is linking the selling pressure in equities to doubts and worries regarding the outlook for the US fiscal cliff; more specifically, the possibility that any agreement might get pushed out beyond year-end.

In European news, Germany´s central bank – the Bundesbank – has today forecast that the country´s phase of economic weakness could "soon be over," even if it does expect a "noticeable" contraction in fourth quarter gross domestic product. 

Trade surplus contracted in October

Labour costs in the Eurozone rose at a 2.0% year-on-year clip in the third quarter, according to Eurostat.

The Eurozone trade surplus fell to €7.9bn in October, from a revised level of €11bn in the month before (Consensus: €11bn). 

 

Slight drop in the single currency
The euro/dollar was dropping 0.07% to the 1.3160 dollar level.

Front month Brent crude futures were rising by 0,120 dollars to the 108.31 dollar per barrel mark on the ICE.

US Market Report

US open: Fiscal cliff resolution may be postponed until January
-Analysts see 10 per cent rise next year in S&P 500

Dow Jones Industrials: 0.35%
Nasdaq Composite: 0.44%
S&P 500: 0.45%

The major US equity benchmarks began the session moving higher.

While today is rather light in terms of the economic calendar, rather the opposite is true of the rest of the week.

Acting as a backdrop, the news-flow regarding the fiscal cliff is mixed at best. On the one hand, some reports suggest that both Republicans and Democrats are beginning to 'talk' of possibly waiting until January before signing off on anything. That delay seems to have irked some investors.

On the other hand, the Republican speaker of the House, John Boehner, is willing to accept higher taxes on millionaires in exchange for restraint on spending on entitlement programs such as Medicare and Social Security.

Obama, however, has rejected that proposal, possibly due to the fact that he wishes to tax higher incomes starting from $200.000 per individual or $250,000 per family. 

Slight rise in other asset classes
10 year US Treasury yields were higher by 1 basis point, to 1.72%.

Front month West Texas crude futures were rising by 0.3% to the 86.91 dollar per barrel mark on the NYMEX.

==================================================================== Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.